The UK could see more than £3 billion invested in the emerging hydrogen sector as more businesses step forward to pledge funding – but only if PM Boris Johnson backs the low-carbon fuel in his forthcoming Net Zero speech expected this week, according to cross-industry group Hydrogen Strategy Now.
Members of Hydrogen Strategy Now, which combined employs around 100,000 people and has a value of £100bn in the UK, said their shovel-ready projects would create thousands of jobs across the country, helping to kick start a post-Covid green recovery.
You can find a list of companies targeting the sector below.
Earlier this year, Hydrogen Strategy Now said its members were ready to pump £1.5bn into the UK hydrogen economy. The group revealed that figure has now doubled to £3bn as more businesses line up plans for hydrogen projects across the UK.
Alex Sobel, Labour MP for Leeds North West, Chair of the Net Zero APPG and member of the Environmental Audit Committee said: “The businesses that are signed up to the UK Hydrogen Strategy Now campaign are ready to invest, create jobs, and lead the way on hydrogen. Their voice is powerful and their arguments compelling – now is the time to seize the initiative”.
Bosses from leading businesses have come together to call on Mr Johnson to pave the way for a British hydrogen economy in his long-awaited energy strategy as they vowed to heavily invest in hydrogen technologies.
The group has welcomed the recent appointment of Andrew Griffith, MP for Arundel and the South Downs, as the Government’s Net Zero Business Tsar, as a positive step in the right direction from Parliament.
But its members have warned that unless the sector receives loud and clear backing from the Government, the UK risks being left behind the rest of the globe.
UK already behind
The global hydrogen economy is estimated to be worth $2.5 trillion by 2050, supporting 30 million jobs. Other nations, such as Australia, Japan, South Korea, Canada, and China have already set ambitious strategies for growing their hydrogen economies. Just last week, Germany joined this list with their own €9 billion hydrogen strategy. The European Commission is also creating an EU hydrogen strategy, which includes plans for multi-billion euro investment in hydrogen projects, and schemes to boost sales of hydrogen electric vehicles.
According to the group, the increasingly bold steps being taken by other nations underlines the need for the UK to bring forward urgent measures to establish a hydrogen strategy and unlock investment and innovation.
“We should not risk falling behind other nations in developing our hydrogen industry,” the group wrote in a letter to Chancellor Rishi Sunak earlier this year.
“As you look to design a post-COVID recovery, we encourage you to focus on creating high-skilled, green jobs, in sectors that will be critical to the future economy, such as low-carbon energy, transport and heavy industry…. the Committee for Climate Change has made it clear that the UK will not meet its Net Zero targets without significant investment in the hydrogen economy,” she said.
Private funding at the core of sector liftoff
Mark Carney, the UK Prime Minister’s Finance Advisor for COP26 and UN
Special Envoy for Climate Action, said at this week’s Green Horizon Summit, “Achieving the net-zero will require a whole economy transition, involving every company, bank, insurer and investor, and creating the greatest commercial opportunity of our time.”
However, funding of industrial decarbonization projects in the UK has been modest. To date, projects have focused on carbon capture and storage clusters in the industrial heartlands of Grangemouth, Humberside, Merseyside, Teesside and South Wales, according to S&P.
Just one major green hydrogen initiative, the Gigastack project, has received study funding. The project is led by ITM Power, Orsted, Phillips 66 Limited and Element Energy.
Attracting cross-party support, the Hydrogen Strategy Now collective wants to see a clear, strategic plan to help unlock significant private funding in hydrogen technologies and manufacturing across the country, driving growth and generating hundreds of thousands of green jobs.
As such, specialist finance contractors or those with their own consultancies in the fund administration, private placement, private equity and infrastructure fundraising and corporate finance sectors could see new opportunities arise should the government’s green agenda include hydrogen.
“I strongly agree that the UK urgently needs a hydrogen strategy, as there are too many small, piecemeal funds and projects,” said Baroness Brown. “We need some serious private and public funding, and a coordinated effort between government and industry, to kickstart and grow a green-job-creating hydrogen economy across the country”.
With increasing numbers of funds focused on ESG attributes, “the City wants to see hydrogen directed towards net-zero, with the focus on electrolysis, energy storage and, most importantly, a diversity of product for renewable energy producers,” ITM CEO Graham Cooley told S&P Global Platts.
UK home to world’s largest electrolyser factory
ITM Power announced the lease of the world’s largest electrolyser factory in Sheffield with a capacity of 1GW (1,000MW) per annum in July 2019. ITM is already attracting local talent from other industries hit hard by the pandemic including metal workers and aerospace engineers.
The factory will be a centrepiece for global hydrogen technology and manufacturing. However, other countries, such as Italy, Germany and France are already ahead of the UK in terms of hydrogen targets, projects and government support.
The European Commission has an ambitious goal for hydrogen capacity to jump 40-fold over the next 10 years, focusing primarily on green (net zero carbon) rather than blue (fossil fuels) hydrogen infrastructure.
In July, the European Commission unveiled its long-awaited hydrogen strategy, outlining its vision to ramp up the EU’s renewable hydrogen capacity from 1GW today to 6GW by 2024 and 40GW by 2030, according to to a Business Green report.
Hydrogen can decarbonize on many factors be it through heavy industries or energy storage, both of which are attractive for governments.
For example, about 7-9% of the world’s emissions arise from the manufacturing of steel. It is considered the world’s most polluting industry.
“Hydrogen could entirely replace the massive use of coal, although the transition will be expensive. However, it is probably the only realistic way that steel can get to net zero, a conclusion that seems increasingly shared within the industry,” according to Chris Goodall, who runs a blog called Carbon Commentary.
“To not invest in hydrogen now is just delaying the inevitable and just pushing it further down the road,” James Collins, ITM Power’s Head of Investor Relations told The Freelance Informer.
“Batteries are going to be a huge part to play in decarbonisation as well, but they won’t be the answer for the bigger stuff. I think it’d be so short-sighted not to keep the lead that we have because we’ve got a huge history of deployment,” said Collins.
Customers and partners of ITM include Sumitomo, Ørsted, Phillips 66, National Grid, Cadent, Northern Gas Networks, Gasunie, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai and Anglo American among others.
To get a better picture of how hydrogen is developing in Europe check out this S&P podcast.
UK-wide hydrogen economy goals
● Create and sustain hundreds of thousands of high-skilled, green jobs, in all parts of the country and in alignment with the Government’s ‘levelling-up’ agenda
● Drive progress to Net Zero and improve air quality in towns and cities
● Secure private investment into the UK, and unlock export opportunities for our products and skills
● Increase UK energy security by making fuller use of the UK’s natural resources
Businesses backing hydrogen
2. Air Products
3. Alexander Dennis
5. Anglo American
13. Bramble Energy
16. DWF Law
19. Energy UK
23. Green Tomato Cars
24. H2GO Power
25. ITM Power
27. Johnson Matthey
28. Kew Technology
31. Neptune Energy
32. Northern Gas Networks
34. Powerhouse Energy Group
35. Progressive Energy
39. Ryse Hydrogen
44. TÜV SÜD National Engineering Laboratory
45. UK H2Mobility
50. Wales & West Utilities